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How to Help Your Business Adapt to a Carbon Price

15 June 2012

According to the March 2012 MYOB Business Monitor, which surveyed 1,043 SMEs, 42 per cent still did not have a good grasp of how the incoming carbon tax could affect their business.

When asked if they believed the impact on their business would be positive or negative, 50 per cent of SMEs said negative; 33 per cent saw no impact; and only 11 per cent expected a positive impact. Five per cent didn’t know. Comparing results by industry, the most uninformed were those in agriculture/forestry/fishing and construction/trade (51 per cent each), while the most informed were those in the finance/insurance (34 per cent).

There was also a distinct knowledge gap between the sexes, with 36 per cent of males versus 51 per cent of females stating that they were ‘uninformed’ about the impact of the tax.

While it is widely know that SMEs will not be subject to the carbon price for their direct emissions, businesses will however, face a substantial increase in costs through the effects of the price on the costs of electricity, manufacturing and products. A report presented to the Australian Chamber of Commerce and Industry in October 2011, showed that a carbon price will have a material impact on the profitability of SMEs, with consequent flow-on effects for investment and employment. SMEs have almost no ability to pass on the additional costs of electricity and transport from the carbon price to their customers.

There is a bright side though. The carbon tax is a major piece of legislation that will have a lasting effect on all business owners and it very well could be a positive experience for those who take action now to research, plan ahead, health-check their business fundamentals and capitalise on the opportunities.

There are practical steps that can be taken now to minimise the impact on your business and some of these include:

1) Identify high energy use hotspots

Getting a handle on energy use is your first priority to work out where savings can be made. A professional energy or carbon footprint assessment will include tips on where your business can improve, or, you can do your own audit. There are lots of helpful free tools online.

2) Get more efficient with energy

Reduce energy in the workplace through changes to lighting and machinery settings. Simple actions such as turning off computer monitors and light switches is a good start. Get staff involved in environmental efforts in the office. Utilise emerging green technologies.

3) Review your current expenses and those incurred over the past year

Direct costs may be fuel, electricity and gas, and indirect costs may be business travel, freight and waste removal.

4) Gain a deeper understanding of where additional costs may be incurred

Ask suppliers about the effect on their business and when they will be able to tell you their price impacts. Major price hikes needs to be justified, not just to you but also to the ACCC.

5) Tap into the carbon reduction market

Create low carbon products to boost sales. Show initiative through voluntary branding to give your business the market advantage.

6) Review your important business processes and identify areas where you could be operating more efficiently

For example, use online technologies like Go To Meeting or Skype to conduct meetings. Moving your business to a stronger online component will also mean less spending on business supplies and stationery. Look at changing processes, upgrading equipment and re-training staff.

7) Get informed

Your business is more likely to achieve the best outcomes from a national carbon price mechanism when there is a solid understanding of the content of the scheme. This will enable you to easily navigate your way around the legislative package that underpins the scheme.

8) Obtain green credentials

Given that sustainability now has a direct cost associated with it, many businesses and consumers will place much more importance on only dealing with sustainable businesses with verifiable green credentials. Green credentials will help you refine your business processes saving your business money, open you up to new markets and ensure you can continue to trade with the old.

So what are you waiting for? Make the most of the carbon tax to save your business money.